Thursday, December 31, 2015

Suppose you would like to start producing fine bourbon, aged for (at least) several years in charred American white oak. How can you hit the ground running? MGP. Those initials used to stand for Midwest Grain Products, Inc., but the company is now called MGP Ingredients, Inc., and makes industrial quantities of lots of things that start out as plants.

So, if you are a new bourbon producer (or an established brand, non-distilling producer), you can buy bourbon from MGP, which makes it in vast quantities in Indiana, and, voila, you have your own small batch whiskey ready to go. (According to Wikipedia, "There are generally no clear criteria as to what defines a "small batch.")

(I'm reminded of how Samuel Adams beer, which started off being sold to beer drinkers in Boston who appreciated a local beer, was initially brewed under contract by Iron City in Pittsburgh, where I lived at the time...none of this is mentioned at https://www.samueladams.com/history).
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I might do some market research tonight, while thinking of the year gone by.

Wednesday, December 30, 2015

I'm somewhat skeptical of broad conclusions drawn on the basis of brain imaging, but here's a paper from the October 21, 2014 PNAS reporting an imaging study from a population that included 19 non-directed ('altruistic') kidney donors. It shared this year's Cozzarelli Prize, given annually to six papers published in PNAS:

Significance

Altruism, and particularly costly altruism toward strangers, such as altruistic kidney donation, represents a puzzling phenomenon for many fields of science, including evolutionary biology, psychology, and economics. How can such behavior be explained? The propensity to engage in costly altruism varies widely and may be genetically mediated, but little is known about the neural mechanisms that support it. We used structural and functional brain imaging to compare extraordinary altruists, specifically altruistic kidney donors, and controls. Altruists exhibited variations in neural anatomy and functioning that represent the inverse of patterns previously observed in psychopaths, who are unusually callous and antisocial. These findings suggest extraordinary altruism represents one end of a caring continuum and is supported by neural mechanisms that underlie social and emotional responsiveness.

Abstract

Altruistic behavior improves the welfare of another individual while reducing the altruist’s welfare. Humans’ tendency to engage in altruistic behaviors is unevenly distributed across the population, and individual variation in altruistic tendencies may be genetically mediated. Although neural endophenotypes of heightened or extreme antisocial behavior tendencies have been identified in, for example, studies of psychopaths, little is known about the neural mechanisms that support heightened or extreme prosocial or altruistic tendencies. In this study, we used structural and functional magnetic resonance imaging to assess a population of extraordinary altruists: altruistic kidney donors who volunteered to donate a kidney to a stranger. Such donations meet the most stringent definitions of altruism in that they represent an intentional behavior that incurs significant costs to the donor to benefit an anonymous, nonkin other. Functional imaging and behavioral tasks included face-emotion processing paradigms that reliably distinguish psychopathic individuals from controls. Here we show that extraordinary altruists can be distinguished from controls by their enhanced volume in right amygdala and enhanced responsiveness of this structure to fearful facial expressions, an effect that predicts superior perceptual sensitivity to these expressions. These results mirror the reduced amygdala volume and reduced responsiveness to fearful facial expressions observed in psychopathic individuals. Our results support the possibility of a neural basis for extraordinary altruism. We anticipate that these findings will expand the scope of research on biological mechanisms that promote altruistic behaviors to include neural mechanisms that support affective and social responsiveness.

Tuesday, December 29, 2015

Frank McCormick alerts me that the Washington Post yesterday took the recent article he coauthored in the American Journal of Transplantation as a jumping off point to discuss the pros and cons of addressing the shortage of transplantable kidneys by allowing the government to pay donors (the article proposed that only the government could pay, and considered payments of $45,000 for a living donor kidney).

Taking the opposite point of view (but arguing that we should do more to reduce financial disincentives to donating, by paying for donor expenses): Francis Delmonico and Alexander Capron December 29, Our body parts shouldn’t be for sale

Here's the first paragraph:
"Traditional economics views markets as simply the confluence of supply and demand. A new field of economics, known as “market design,” recognizes that well-functioning markets depend on detailed rules. For example, supply and demand drive both stock markets and labor markets, but someone who wants to buy or sell shares in a company goes through very different procedures from those followed by a job seeker or an employer. Moreover, labor markets work differently from one another: Doctors aren’t hired the way lawyers, professional baseball players, or new MBAs are. Market designers try to understand these differences and the rules and procedures that make various kinds of markets work well or badly. Their aim is to know the workings and requirements of particular markets well enough to fix them when they’re broken or to build markets from scratch when they’re missing."

Sunday, December 27, 2015

"HasJosé Salvador Alvarengabeen reaching for thefava beans and chianti? The 36-year-old sailor survived at sea for more than a year after being cast adrift by a storm. But now the family of his fellow sailor, 22-year-old Ezequiel Córdoba, say the older manturned cannibal to survive. Alvarenga insists Córdoba died because he could not stomach the raw birds and turtle blood that were their only source of food. But Córdoba’s family are suing the Salvadorian fisherman for $1m for eating their relative.

But is eating someone’s flesh in such extreme conditions against the law? Not in the UK, according to Samantha Pegg, senior lecturer at Nottingham Trent University. “There is no offence of cannibalism in our jurisdiction,” Dr Pegg says. She points out that Alvarenga’s story is similar to a famous case in legal history. In 1884, a four-man crew sailing from England to Australia were shipwrecked with almost no food. When the 17-year-old cabin boy became ill, two of the men, Stephens and Dudley, decided to kill and eat him. Five days later they were rescued and charged with murder. The third man was not charged, despite eating his companion’s flesh. Although their lawyers argued that killing the cabin boy was a necessity for the survival of the three other men, Stephens and Dudley wereconvicted of murder and sentenced to death – later commuted to six months’ imprisonment. “This set a precedent that there is no necessity defence for murder,” points out Pegg.

In cases of serial killers or sexually motivated cannibals, the charge is always murder, she says. In Germany, where there is also no offence of cannibalism, a court had to wrestle with a case where a man “offered” himself to be killed and consumed by an IT expert called Armin Meiwes – Meiwes was still convicted of murder. Last year, a German police officer was sentenced to eight-and-a-half years for a similar crime of “murder and disturbing the peace of the dead”. However, because his victim was said to be “willing”, he was not given the maximum sentence.

Other would-be cannibals could face charges of outraging public decency or preventing a lawful burial, says Pegg. In 1988, performance artist Rick Gibson ate human tonsils on the street; he claims to be “the first cannibal in British history to legally eat human meat in public.” With a rise in “body food”, and eating your partner’s placenta, he may not be the last."

Saturday, December 26, 2015

"Japan’s highest court upheld a law dating back more than a century that requires married couples to share the same surname, rejecting a claim on Wednesday that it discriminates against women by effectively forcing them to give up their names in favor of their husbands’.

"The ruling was a blow to Japanese women seeking to keep their maiden names after marriage. Some couples have chosen not to register their marriages — opting instead to stay in common-law relationships with fewer legal protections — in order to keep separate surnames.
...
"The prohibition against separate surnames has survived decades of challenges in the courts and in Parliament, but it was the first time a suit seeking to overturn it had reached the Supreme Court. Ten of the court’s 15 justices ruled that the ban, first imposed in 1898, was consistent with constitutional protections for gender equality.

"Although the law does not specify which spouse’s surname must be used, wives adopt their husbands’ names in an estimated 95 percent of cases.

"The chief justice, Itsuro Terada, said the law did not impose an undue burden on women in part because they could continue using their maiden names in their professional lives, a practice that has become more widely accepted in recent years.

"The government began allowing married civil servants, for instance, to use their former surnames for official business in 2001.

“The issue of separate names for spouses should be debated in Parliament,” Justice Terada said, throwing the issue back to the legislature.

"The government of Prime Minister Shinzo Abe will have to calibrate its response carefully. Mr. Abe has positioned himself as an ally of working women, contending that Japan needs to keep more women in the labor force as its population shrinks and ages. But many members of his right-leaning Liberal Democratic Party support the surname law, and the party has quashed previous parliamentary initiatives aimed at changing it.

Newspaper surveys have shown that a slim majority of the public favors changing the law to allow couples to keep separate surnames."

"All 14 patients involved in Australia’s first seven-way paired kidney swap have ­recovered well after the transplants at Victoria’s Monash Medical Centre and Royal Melbourne and Austin hos­pitals, in co-ordination with NSW’s Westmead, Prince of Wales and John Hunter ­hospitals.

For five anxious hours, the team battled to overcome a “hiccup” when a malfunctioning aircraft was forced to return to Sydney mid-flight with a Melbourne-bound kidney, but still managed to complete the operations safely on ­November 19.

After three months’ planning, Australian Paired Kidney Exchange Program director Professor Paolo Ferrari said the transplants were “an amazing team effort”.

“It is always an effort when you have two, three, four or, in this case, seven,” Prof Ferrari said.

“Although this ­occurred recently, the actual match-up that told us there was a possibility for these ­patients to have a kidney transplant first came in ­August. Because of the excitement on that day — mostly ­because of the complexity of having all the centres involved and the little hiccup — there was a lot of tension.
...
"At 8am, simultaneous operations began in seven operating theatres in the three Melbourne and three Sydney hospitals, as the first stage to remove the kidneys from the donors.

The second-stage ­operations began at a Melbourne hospital at 12.23pm when an organ couriered across town was taken off the ice and implanted into a lucky recipient.

Five other synchronised transplants occurred progressively across the two cities over the afternoon as the kidneys arrived via Qantas flights and StarTrack couriers.

But a problem with an ­anaesthetic machine delayed one Sydney retrieval and the kidney had to be placed on a flight 30 minutes later than planned.

The problem was compounded when the aircraft developed its own issues mid-flight and had to return to Sydney with its precious cargo.

Five hours later, the kidney finally arrived in Melbourne still in good health, where the Austin Hospital team led by Associate Professor Frank Ierino was able to begin the final transplant at 9.30pm."

"But what about the myriad other requirements the legal system imposes on commercial drivers?
Consider: In most jurisdictions, a “for hire” livery driver needs a commercial driver’s license, a background check and criminal records check, and a vehicle with commercial plates, which often means a more detailed and/or more frequent inspection. Using ordinary drivers in noncommercial vehicles, TNCs skip most of these requirements, and where they take such steps (such as some efforts towards a background check), they do importantly less than what is required for other commercial drivers (as discussed further below). One might reasonably ask whether the standard commercial requirements in fact increase safety or advance other important policy objectives. On one hand, detailed and frequent vehicle inspections seem bound to help, and seem reasonable for vehicles in more frequent use. TNCs typically counter that such requirements are unduly burdensome, especially for casual drivers who may provide just a few hours of commercial activity per month. Nonetheless, applicable legal rules offer no “de minimis” exception and little support for TNCs’ position."
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I was recently in Toronto, when taxi drivers blocked some intersections to protest what they saw as lack of law enforcement regarding Uber, and earlier I was in Vancouver, where Uber was no longer operating, after a brief foray into that market.

On the other hand, it's clear that Uber is providing services that are being eagerly consumed by a public that hasn't been adequately served by existing taxis and delivery services. (In Toronto, one colleague told me that when he goes to the business school cafeteria and sees a long line, he can order lunch from UberEATS and walk out to the street to pick it up faster than if he waited on the cafeteria line...)

Similarly for Airbnb (see this earlier post): while some hosts may be in violation of local laws, Airbnb is serving (and creating) a big market.

So, things are in flux: we'll see new regulations, that will presumably reach a compromise between serving these new markets while constraining and shaping them.

If you teach in a Business school, how should you advise your entrepreneurial students about market making and law breaking?

When I was recently in Russia, I gave a talk that touched on some of this, about markets as a source of sometimes disorderly growth, called "Markets, businesses, and governments: a complicated triangle."

"The global rhino population has dwindled from 500,000 at the beginning of the 20th century to about 29,000 today. The surging trade in illicit horn has cut the population of the three remaining Asian species to just a few thousand, including about 40 Javan and less than 100 Sumatran rhinos. Just about 20,000 Southern White Rhinos and 5,000 black rhinos, which include three subspecies in Africa, survive.
...
"Black-market rhino horn can fetch as much as $100,000 a kilogram in Vietnam and other Asian countries, where it is peddled as a cure for ailments ranging from headaches to cancer. Many conservationists say that a legal marketplace would only raise demand. They argue instead for publicity campaigns to debunk the myths that lead many in Asia to pour rhino-horn powder into useless pills.

Others warn that rhinos can’t wait for those beliefs to wither. “I do not think we have a significant amount of rhinos left to invest in education,” said Louise Joubert, founder of SanWild Wildlife Sanctuary, a rehabilitation center and reserve in South Africa’s Limpopo province. Rhinos “are on a ticking time bomb down to extinction.” Mr. Hume and many ranchers argue that legalizing the trade and flooding the market with sustainably harvested horn could sate demand, lower prices and cut poachers out of the equation.

Rhino horn is made of keratin, like human fingernails. It grows as much as 5 inches a year. Biologists say that as long as a stump of 2 to 3 inches remains, it can be trimmed, doing a rhino no more harm than a manicure. “There are no nerves in rhinos’ horns,” said Raoul du Toit, director of Zimbabwe’s Lowveld Rhino Trust. He said there is no evidence that the procedure affects rhinos’ breeding practices or leaves them more susceptible to predators. “Why would you hunt a rhino for seven, eight, nine, 10 kilos of horn when, in a lifetime, it can grow 70 kilos of horn?” Mr. Hume asked.

"Animal-rights activists, conservationists and South Africa’s government are skeptical. Critics say that Mr. Hume and other large ranchers stand to profit if they can sell horn harvested from their herds.

“Where we differ is with your attitude towards the exploitation of an endangered species with the intention of making large profits,” Margot Stewart, founder of the nonprofit group Wild and Free South Africa, wrote in an open letter to Mr. Hume. She argues that rhinos are wild animals and should not be kept in paddocks like sheep or cows—and that it is unethical to farm and sell rhino horn since it has zero medicinal value. “Only two parties want this to continue: the rhino farmers and organized crime syndicates,” she added.

"Mr. Hume petitioned South Africa’s High Court in Pretoria to lift the moratorium in September. A judgment is expected in the next few weeks. “I honestly believe the more horn we can sell to people who are using it, the less pressure there will be on my rhinos and Kruger Park’s rhinos,” Mr. Hume said, alluding to South Africa’s premier national park.
...
"Mr. du Toit, the conservationist in Zimbabwe, warns that poverty and graft in the region are too widespread to trust that the rhino-horn market would be restricted to sustainably trimmed horns. Corruption “is our biggest problem,” he said, and it would “pervade the supply chains” of a legalized horn trade.

"The sides argue about precedents. A one-off sale of elephant-ivory stockpiles from four southern African nations in 2008 only whetted appetites for tusks, and elephant poaching has since soared to all-time highs. But a sustained, legal tide of supply—not a brief flood—has worked for other species, like South America’s vicuña, a llama relative. Mr. Hume notes that vicuñas were once slaughtered for their softer-than-cashmere coats but are now farmed sustainably, back from the edge of extinction."
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Here's the NYT:U.S. Pours Millions Into Fighting Poachers in South Africa

JOHANNESBURG — The Obama administration is stepping up efforts here to combat illegal wildlife poaching, an expanding criminal enterprise in South Africa that has driven several animal species toward extinction and fueled the growth of international gangs.

But the effort is coming as South Africa wrestles with its own strategy, which could diverge significantly from Washington’s. Just last month, a South African court lifted a ban on domestic trade in rhinoceros horns, reigniting a debate between those who claim that a legal trade within South Africa’s borders could help stem the poaching crisis and those who say it would only worsen it.

Tuesday, December 22, 2015

One of the fun things about writing Who Gets What and Why was figuring out how to write about economics in a way that might be accessible to non-economists. So I was heartened by this line from a very short recent book review:

"Reading this book will make you proud of yourself because you read something about economics, written by a Nobel-Prize-winning economist, and you understood it."

The archived videos from Algorithmic Game Theory and Practice Workshop at the Simons Institute for the Theory of Computing can be found by
clicking on the titles of individual talks on the schedule (below) or on
the Simons Institute YouTube
channel.